Macquarie: Fall TV Promotions Lift Homepage Ads

The three major portals and YouTube (NSDQ: GOOG) sold more of the lucrative custom homepage ads in the second half of Q3, according to the latest figures from Macquarie. But it could be a blip, as the gains more mostly due to the influx of spending by TV networks promoting the fall season.

While Yahoo (NSDQ: YHOO), AOL (NYSE: AOL), YouTube, and MSN to be finally getting some traction for these higher quality display spots, which are looked at by the industry as way to position online advertising as a premium branding medium and not just a vehicle for cheaper direct response ads, the results remain mixed, according to Macquarie analyst Ben Schachter and team as part of their twice-quarterly look at these companies’ display efforts.

Yahoo was slapped around a lot this week for what was largely perceived as an over-hyped partnership with ABC News (NYSE: DIS). But the Macquarie report shows that Yahoo has made significant progress on its homepage ad efforts in the last few weeks.

Yahoo had the “more engaging” large homepage ads in front of users logging in on 74 percent of the days in the latter half of Q3. Its homepage was covered on just 17 percent of the days in in the first half of the quarter. What accounts for such a huge difference? Sure, most of the media companies that were touting their fall TV lineup waited until September to roll out their campaigns, as opposed to the generally sleepy summer months. That said, Macquarie also suspects some offers of discounts, which although may undercut the value of these large ads, still provides a bigger revenue boost than the standard display units.

Diversity problem: One of the problems that Yahoo and its rivals have tended to find with these special homepage ad inventory is the lack of diversity in terms of the types of marketers interested in spending. For the most part, media companies have been the main advertisers. If the portals and YouTube are going to be able to turn homepages ads into a meaningful revenue stream, they’re going to have to work harder to attract financial services, packaged goods and pharmaceuticals.

In Macquarie’s counting, 35 percent of the Yahoo homepage ad units were taken by media advertisers compared with MSN at 19 percent and AOL at 22 percent.

One good sign was that daily deals ads and for-profit education spots, which had been growing in prominence among homepage advertisers, have been a diminishing part of the mix.

These ads tend to be “non-branding” and reflect the more traditional sense of online advertising as direct response medium. While these sites need revenue wherever they can get it, much of the point at this early stage is to offer a showcase for bigger brand dollars. While direct response will always be a major part of online ad spending, it has tended to reinforce the view among major marketers that TV and magazines are where the expensive, creative work should be shown.

In general, Yahoo had the highest percentage of pure branding-oriented advertisers, at 61 percent, across the sites Macquarie looked at; these marketers made up 33 percent of MSN’s premium homepage inventory, while AOL had 26 percent.

The situation was more mixed for AOL in second half of Q3. Compared with MSN and Yahoo, AOL had the lowest proportion of oversized/custom ad units and purely brand-focused ads in. One the plus side, the percentage of oversized units was up relative to the first half of Q3 and Q2.

Also, after a slow beginning, Project Devil adoption is starting to be seen on AOL’s homepage, as well as several purchases of AOL’s tall “Skyscraper” ad unit. Project Devil ads are still relatively rare, though that effort has largely been concentrated on selling on partners sites, such as Hearst Magazines Digital Media,, Meredith Corp, The Wall Street Journal Digital Network and The Weather Channel’s